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Background Fermentation of lignocellulosic biomass is an attractive alternative for the production of bioethanol. Traditionally, the yeast Saccharomyces cerevisiae is used in industrial ethanol fermentations. However, S. cerevisiae is naturally not able to ferment the pentose sugars D-xylose and L-arabinose, which are present in high amounts in lignocellulosic raw materials. Results We describe the engineering of laboratory and industrial S. cerevisiae strains to co-ferment the pentose sugars D-xylose and L-arabinose. Introduction of a fungal xylose and a bacterial arabinose pathway resulted in strains able to grow on both pentose sugars. Introduction of a xylose pathway into an arabinose-fermenting laboratory strain resulted in nearly complete conversion of arabinose into arabitol due to the L-arabinose reductase activity of the xylose reductase. The industrial strain displayed lower arabitol yield and increased ethanol yield from xylose and arabinose. Conclusion Our work demonstrates simultaneous co-utilization of xylose and arabinose in recombinant strains of S. cerevisiae. In addition, the co-utilization of arabinose together with xylose significantly reduced formation of the by-product xylitol, which contributed to improved ethanol production.